Metro Manila leads in office space rentals in Asia

Metro Manila has surpassed major cities in Asia when it comes to office space occupancy.

Based on a study conducted by Cushman and Wakefield Research, Metro Manila ranks first among the 10 cities in Asia with 482,126 square meters of office space occupied.

At second place is Mumbai in Maharashtra, India, with 314,528 square meters; Bengaluru in Karnataka, India, with 287,630 square meters; Chennai in Tamil Nadu, India, with 263,303 square meters; Guangzhou in Guangdong, China, with 250,114 square meters; Pune in Maharashtra, India, with 225,117 square meters; Chengdu in Sichuan, China, with 222,336 square meters; Shenzhen in Guangdong, China, with 185,450 square meters; Kuala Lumpur in Malaysia with 184,925 square meters; and Seoul in South Korea with 133,604 square meters.

This information gathered by Cushman and Wakefield only shows that the real estate market in the Philippines—particularly the office rental sector—is currently maintaining its uptrend.

“The performance of the office sector in Manila compared with other cities in the region is a testament to how strong the market is today. It is witnessing a positive momentum due to strengthening economic conditions and improved business sentiments, relatively insulated from the global slowdown. Stable growth in the BPO [business process outsourcing]sector continues to fuel office expansions in Metro Manila,” said Joe Curran, general manager of Cushman and Wakefield Philippines.

Curran echoed the observation of other real estate investors in the country, saying that the real estate sector has a significant role in the Philippine economy’s rapid expansion. He pointed out that the country’s economy has been resilient, which is why foreign and domestic companies have set up or expanded their operations in the Philippines. That has resulted in the expansion of office space demand.

With the expected increase in the demand for office spaces on the fourth quarter of this year up to the year 2015, Cushman and Wakefield Research estimated that there will be about 1.2 million square meters of office space that will be made available in the key areas in Metro Manila, 42 percent of which will be in Bonifacio Global City in Taguig City.

Cushman and Wakefield also noted an increase in office rentals in the Makati Central Business District, the highest increase in the district so far at 11 percent.

“Completions are expected to be thin in the first half of 2014 as developers are expected to complete projects by end-2014, 2015 and into 2016. This is expected to put pressure on prices and vacancy,” Curran said.

This is also the reason why Cushman and Wakefield Philippines Inc. was opened in October this year. Sanjay Verma, chief executive officer of Cushman and Wakefield Asia Pacific, said they have come to understand the potential of the real estate market in the Philippines.

“With all the positive developments in the country, we are bullish on the Philippine real estate market. It was only fitting that we established an office here because we understand the potential of the market. Our presence in Manila will help us further increase our geographic service offerings to our global clients and leverage the economic growth that the Philippines has to offer as an emerging economy,” Verma stressed.

His view was supported by Arshpreet Chaudhry, executive managing director of Cushman and Wakefield Southeast Asia.

Philippine office
Chaudhry said that they have agreed to put up an office in the Philippine to give the company “the ability to leverage the full breadth and depth of Cushman and Wakefield’s global resources, and bring them to the Philippines for the benefit of our clients in the Philippines—both on the developer and investor side and the occupier side.”

That’s why, he said, they did not want to utilize the “franchisee model” that some of their competitors used in coming to the country.

“While we started the office by providing office leasing and project management services, within the year we have expanded our service offering to include research and advisory, facilities management, hospitality and capital markets service,” Chaudhry said.

Furthermore, he said that there is a need among developer clients who have an increasing need for world-class management services. With this in mind, they would be launching their property management services by next year, which will require employing personnel and investing more in the country.

Cushman and Wakefield was founded in 1917 in New York City. It is now the world’s largest privately held commercial real estate services firm, with approximately 16,000 employees operating from 250 offices in 60 countries and six continents.